LATEST COVID RELIEF CREATES HISTORIC OPPORTUNITY FOR BUSINESS OWNERS
The business brokerage market currently weighs heavily in favor of business owners seeking to sell their business. There are too few quality businesses for sale to meet buyer demand. Businesses that sold in the 2nd half of 2020 were valued at higher multiples than at any other time in recent history. Interest rates remain at historically low levels, fueling increased buyer activity and bank lending.
A significant Buyer-Borrower motivation is being provided by the Small Business Administration’s resumption of borrower benefits under the COVID driven federal funding Section 1112 of the Care Act-March 2020.
If you are a business owner contemplating the sale of your business, there is not a better time than right now.
SBA COVID Relief Act, 2021
“Consolidated Appropriations Act, 2021”
• Provides $3.5 billion in funding for extension of Section 1112 payments—appropriations available through September 30, 2021.
• Resumes the forgiveness of principal and interest (P&I) on small business loans guaranteed by the SBA under the 7(a), 504 and Microloan programs, established under Section 1112 of the CARES Act. The first 6 months of P & I will be forgiven of newly approved and funded between February 1 and September 30, 2021, capped at $9,000 per month.
• Waives SBA Guaranty Fee’s for all loans funded and closed between February 1 and September 30, 2021.
• Provides that all borrowers with qualifying loans approved by the SBA prior to the CARES Act (Pre-Cares Act-March 2020) will receive an additional three months of forgiven P & I, starting in February 2021. Going forward, those payments will be capped at $9,000 per borrower per month.
• Provides that, after the three-month period described above, borrowers considered to be underserved—i.e., the smallest and hardest-hit by the pandemic—will receive an additional five months of P&I payments, also capped at $9,000 per borrower per month.
• Borrowers with SBA microloans or 7(a) Community Advantage loans
• Borrowers with any 7(a) or 504 loan in the hardest-hit sectors, as measured by the severity of sector-wide job losses since the start of the pandemic, including all those belong to 2- and 3-digit NAICS categories with the most severe job losses since the start of the pandemic:
• Accommodation and food services
• Arts, entertainment, and recreation
• Educational services
• Mining and logging
• Apparel and clothing accessory stores
• Sporting goods, hobby, book, and music stores
• Air transportation
• Transit and ground passenger transportation
• Scenic and sightseeing transportation
• Publishing industries, except Internet
• Motion picture and sound recording industries
• Broadcasting, except Internet
• Rental and leasing services
• Clarifies eligibility and increases program integrity:
• SBA payments should be made on any loan approved before the applicable deadline, and debt relief payments should be made only once the loan is fully disbursed.
• SBA may establish a minimum loan maturity period for each loan product covered under the section to prevent program abuse.
• Any business or applicant may only receive P&I payments for only one loan approved after CARES Act enactment.
Call us today to learn more about what this may mean for your business. The COVID Relief package has helped create a marketplace of aggressive buyers and premium business prices. Let’s discuss this today.
Sunbelt Business Advisors